Submitted on Wed, 2014-05-14
By Imaad Shoukathullah

New rule from CMS could increase Medicare payments to Federally Qualified Health Centers by up to 32% next year.

Medicare Reimbursements to Increase by 32% for Federally Qualified Health Center

Get ready to start earning more revenue on the services you already provide to patients with Medicare. On April 29th, the Centers for Medicare and Medicaid Services (CMS) issued a final rule about a new payment system for Federally Qualified Health Centers (FQHC) that dispense preventative and primary care medical services to more than 20 million Americans a year. The final rule establishes a payment system outlined in the Affordable Care Act that could increase Medicare reimbursements for existing services by up to 32% in 2015.

Effective October 1, 2014, the Medicare Prospective Payment System (PPS) for Federally Qualified Health Centers will increase the number of services for which the health centers can be reimbursed, as well as the amount of reimbursements they can receive. The enhanced payment system requires that facilities will earn a per diem of $158.85 for each encounter with a patient covered by Medicare. That figure will then be adjusted based on care factors such as intensity or duration of visits, as well as the geographic variations in costs for care provided. The new system will also be adjusted for the increased costs associated with providing care to first time patients.

We believe the new payment system is great news for local health departments and community health centers. CMS approximates that 10% of total billings by local health are to Medicare. Dramatically increasing the amount you are able to recoup from those existing services from Medicare will allow you to better create sustainable revenue, maintain or add staff, and keep expanding your center’s ability to impact your community’s health. There’s no doubt that the increased reimbursements will help FQHCs continue to provide great medical services to the traditionally underserved areas that rely on them.

“The new payment system helps increase the ability and capacity of federally qualified health centers to provide essential and affordable services for even more patients who need care,” said CMS Administrator Marilyn Tavenner. “These FQHCs are essential to countless patients in local communities who depend on them for getting their primary and preventive care.”

Under the previous payment system, FQHCs were only reimbursed for specific covered services provided to those with Medicare and subject to an upper payment limit of $129.02.

The final rule is open to comments until July, as CMS would like input on a few proposals it makes on payment codes, chronic care management services, and preventative & non-preventative services being present on the same claim. A new final rule will be published shortly thereafter, and you should start seeing the increases in your budget by the beginning of 2015.

Our SMART Health Claims management system helps Federally Qualified Health Centers create sustainable revenue by building/optimizing billing programs to maximize reimbursements from Medicaid, Medicare, and private insurance plans. Your health department could greatly benefit from this new payment system, so be sure to schedule a meeting with our claims management experts today to review your processes to make sure you can maximize the benefits of the new rule.